Magyar Bancorp (NASDAQ:MGYR) Has Announced A Dividend Of $0.03
The board of Magyar Bancorp, Inc. (NASDAQ:MGYR) has announced that it will pay a dividend on the 18th of May, with investors receiving $0.03 per share. This payment means the dividend yield will be 1.9%, which is below the average for the industry.
See our latest analysis for Magyar Bancorp
Magyar Bancorp's Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Currently, Magyar Bancorp does not yet have a history of paying dividends out, with this being its first year doing so. Despite Magyar Bancorp only paying out for the first time, calculating for the company's payout ratio shows a percentage of 9.8%, a great sign for the sustainability of the company's dividend for the future.
Over the next year, EPS could expand by 41.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 12% by next year, which is in a pretty sustainable range.
Magyar Bancorp Doesn't Have A Long Payment History
It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Magyar Bancorp has seen EPS rising for the last five years, at 42% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
We Really Like Magyar Bancorp's Dividend
Overall, we like to see the dividend staying consistent, and we think Magyar Bancorp might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Magyar Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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